Rishi Sunak Grilled as Non-Dom Wife May Have Saved £20m in Tax on Dividends From Father's IT Empire
06:55 GMT 08.04.2022 (Updated: 15:18 GMT 28.05.2023)
© AFP 2023 / Tristan Fewings
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The UK chancellor’s wife, Akshata Murty, who married Rishi Sunak in 2009 and is said to have moved to the UK in 2015, is the daughter of the billionaire founder of the Indian-headquartered company Infosys, worth approximately £690m, in which she holds a 0.9% stake.
Rishi Sunak has come under fire over the fact that his wife has potentially avoided up to £20m in UK tax on dividends collected from her family’s IT business empire worth approximately £690m, The Guardian reported.
Akshata Murty is the daughter of the billionaire founder of the Indian-headquartered company Infosys, in which she holds a 0.9% stake. Murty has amassed an estimated 5.4bn Indian rupees (£54.5m) in dividends from the tech company over the past seven and a half years, according to cited public data. Last year her dividends were worth £11.6m.
Such dividend payouts would require UK resident taxpayers to fork out a 38.1% tax (rising to 39.35% from 6 April).
If not for her non-dom status, first introduced under King George III in 1799, over the entire period in question she would have had to pay about £20m in UK taxes.
7 April 2022, 09:04 GMT
The chancellor’s wife has thus been benefiting from a scheme that has tended to help the wealthiest in the UK dodge national levies, argue critics. Furthermore, a spokesperson for Murty confirmed she paid an annual £30,000 levy to keep the status.
Non-Domiciled Status
A person registered as non-domiciled with HM Revenue and Customs (HMRC) is a tax resident in the United Kingdom, but does not have to pay UK tax on income and capital gains earned overseas unless they bring their money into the country. Non-doms still have to pay tax on money earned within the UK. Because they are tax resident in the UK, non-doms, typically, are not tax resident in their country of domicile, and therefore not liable for tax in either country on their worldwide income.
Rishi Sunak is understood to have declared his wife’s tax status to the Cabinet Office when he became a minister in 2018. Furthermore, he ensured that the Treasury was “aware, so as to manage any potential conflicts”.
Integrity of Tax Policy ‘Threatened’
In the wake of the revelation, the UK Labour Party wrote to Rishi Sunak, with James Murray, the shadow financial secretary to the Treasury, underscoring that it was “in the vital public interest” that the chancellor provide clarity on whether he had benefited from his wife’s status.
“As chancellor it is crucial you both follow the rules and lead by example. Any impression that there is one set of rules favouring a few, and another for everyone else, threatens the integrity of tax policy in our country”, wrote Murray, as cited by The Guardian.
“The chancellor has imposed tax hike after tax hike on the British people. It is staggering that – at the same time – his family may have been benefiting from tax reduction schemes. This is yet another example of the Tories thinking it is one rule for them, another for everyone else”, fumed Tulip Siddiq, the shadow economic secretary to the Treasury.
As some Conservative MPs also voiced concerns, a former minister was cited as saying:
“The perception is [an attitude of] ‘what is the problem?’ Here is someone worth £3bn who has a different tax arrangement. I’m sure everything is above board but that’s not the point”,
Another Tory MP was cited as saying: “There’s this guy, as rich as Croesus, putting up taxes when people are worrying about the next gas bill”.
Britain's Chancellor of the Exchequer Rishi Sunak (R) sits beside Britain's Prime Minister Boris Johnson (C) at a Cabinet meeting of senior government ministers at the Foreign and Commonwealth Office (FCO) in London on September 1, 2020.
© AFP 2023 / TOBY MELVILLE
On Thursday, Rishi Sunak rejected accusations of hypocrisy or tax avoidance.
“To smear my wife to get at me is awful. She loves her country like I love mine”, Sunak was quoted by The Sun as saying.
“Akshata Murty is a citizen of India, the country of her birth and parents’ home. India does not allow its citizens to hold the citizenship of another country simultaneously. So, according to British law, Ms Murty is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income”, said a spokeswoman for Murty.
Under current law, Akshata Murty, who married Sunak in 2009 and is understood to have moved to the UK in 2015, will automatically be deemed domiciled after living in the country for 15 years.
The controversial rule has often been criticized for benefiting the very rich. A study by the London School of Economics and the University of Warwick discovered that over two-fifths of individuals who earned £5m or more in 2018 had claimed non-dom status since 1997.
Some of the most well-known people who reportedly claimed non-dom status include Daily Mail owner Lord Rothermere, Lord Ashcroft, multimillionaire and former deputy chairman of the Conservative party, former HSBC boss Stuart Gulliver, and Conservative minister Zac Goldsmith.
